What is an Income Tax Return? or famously known as ITR. Income Tax Return is when a person is supposed to submit to the Income-tax Department of our nation. It withholds the information of a person’s income and the taxes that are to be paid during the year. The most important thing you need to keep in mind is; the information filed in ITR should and always pertain to a particular financial year, and that is, starting from the 1st of April and ends on the 31st of March the next year.
As you know, income can be of 5 types:
Based on the different types of incomes, every individual is prescribed to file a different ITR by the Income Tax Department. According to the Income Tax Department of India, there are 7 types of ITR forms, known as ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, ITR-7, and they are applied according to the nature and amount of income type of the taxpayer. Usually one uses an income tax calculator in India to figure out how much they would have to pay and which ITR they would file, so here is an overview.
Types of ITR Forms
ITR – 1: This form is filed when an individual has a total income up to ₹50 lakhs through salary, one house property, another source that excludes lotteries, and agricultural income up to ₹5000.
ITR – 2: The ITR 2 is filed by individuals and HUFs who are usually not eligible to file the ITR 1 form and have income and profits from a profession or business.
ITR – 3: This is filed by individuals who have income from business or profession.
ITR – 4: This is filed when the individual, HUFs, or firm are residents having a total income up to ₹ 50 lakhs and having income from business or profession computed under section 44AD, 44ADA, or 44AE.
Is it Really Hard to File for ITR?
Well if you are wondering that filing for an income tax return could be a tough deal to be finished with. It is not really. In some cases filing for ITR is not necessary at all, and the job comes in when you need to know whether you should file for ITR or not.
There are some cases when one should file for ITR
a) When an individual holds a beneficial owner or otherwise any asset that is located outside of India.
b) When an individual has signed authority in any account that is located outside of India.
c) When you are a beneficiary of any asset that is located outside of India.
d) When an individual deposits more than Rs. 1 crore in the bank account.
e) When there is a foreign travel expense that is more than Rs. 2 lakhs.
f) When electricity consumption of a household is more than Rs. 1 lakh.
How Does One File ITR?
Here are certain steps that can get you to file your ITR online through the internet.
#1. Firstly, visit the Income tax official website.
#2. Register on the portal and log in to your ID.
#3. Click on the option that says ‘Taxpayer’ and enter your PAN.
#4. After the validation, you will be needed to give in your details such as name, address, etc.
#5. Enter your email address and your phone number.
#6. Once you fill in all of this, you can click on the option that says ‘continue.’
#7. Then you would have to verify your details with an OTP sent to your registered number.
#8. Enter the OTP that was sent.
#9. Once the OTP has been successfully entered a window will be opened for you to check up on the details given.
#10. Finally, you can set up your password and your login.
#11. Then you can click on register, after which you will receive an acknowledgement message and file for return by clicking on the ‘return’ option.
Is it Important to File ITR?
Filing tax returns is a yearly activity that is seen as a moral and social duty of every responsible citizen of the country. It is the only basis for the government to know the amount and means of expenditure of the citizens and provides a platform for the assessee to claim for a refund, among other forms of relief frequently. Why is it important for you to File Income Tax returns, here is why:
– Filing for returns is a sign that proves you to be responsible.
– It is mandatory in some cases.
– Usually, your loan and credit card company might want to see these records.
– It is also a necessity when you want to claim adjustment against past losses.
– It will also come in handy and prove to be useful in the case of revised returns.
If you were thinking it is a tedious job to file Income Tax Returns, now you know that it is not. All you need to know is if it is mandatory for you, which ITR you should be filing, and the part the returns would play in your finances.